MORGAN STANLEY: These 12 stocks have the most downside

A trader works on the floor of the New York Stock Exchange (NYSE) on August 24, 2015 in New York City.Spencer Platt/Getty Image

Morgan Stanley has released its list of "Global Secularly Challenged Stocks," identifying a total of 81 stocks that have "exposure to longer-term secular challenges, and where the risk-reward is unfavourable."

Below we present the top 12 of the total 36 North American stocks, picked by Morgan Stanley, with the highest downside risk from their current prices.

DSW

"Consumer migration to shopping online, increased competition on price by department stores and other concepts are making it increasingly difficult for DSW to drive traffic in stores and top line."

Source: Morgan Stanley

JCPenney

Ashley Lutz/Business Insider

Ticker: JCP

Sector: Retail

Market cap: $2.9B

Share price: $9.47

Downside to Bear: 68.3%

"With SG&A dollars down 30% since 2011, we wonder if JCP can continue to significantly cut costs as it strives to drive in-store traffic and fend off online players such as Amazon."

Source: Morgan Stanley

LPL Financial Holdings

Stephanie Strasburg

Ticker: LPLA

Sector: Financials

Market cap: $3.6B

Share price: $39.89

Downside to Bear: 72.4%

"LPLA’s core brokerage business (60% of AUM) is likely to face continued pressure given regulatory headwinds from the DOL Fiduciary Rule, structural pricing compression, and shift to lower-fee products that reduce commission and transaction revenues."

Source: Morgan Stanley

Avis Budget Group

Luke MacGregor

Ticker: CAR

Sector: Consumer Discretionary/Industrials

Market cap: $3.4B

Share price: $38.48

Downside to Bear: 74.0%

"We believe the long-term impact from an ever-increasing number of ride-sharing and car-sharing options will come in the form of price, as well as potentially volume."

Source: Morgan Stanley

Sprint

Justin Sullivan/Getty Images/AFP

Ticker: S

Sector: Telecom Services

Market cap: $29.3B

Share price: $7.35

Downside to Bear: 77.6%

"While the near-term picture has improved, we still expect Sprint to struggle to profitably grow its subscriber base as the fourth largest wireless carrier, especially if the Bells begin to respond more aggressively to Sprint's promotions."